I meant that we need to gradually convert from a system in which social security taxes from people current working are paid out directly to retirees to a system in which at least a portion of the social security taxes paid in by people currently working are actually set aside for the individual paying them to use when he/she retires.
That way, there is a direct relationship between the amount contributed and the amount collected on retirement, and it is not as subject to manipulation by the politicians. I have not thought out all the details, but I know there have been some detailed studies done on how the whole thing would be implemented. The bottom line is that it would eventually remove the dependence on future workers to fund the retirements of people working today.
Social security is going to be a big issue because it amounts to a huge tax on the younger generations which I don't think can be substantially increased as the population ages. People who spent a good part of their working lives in the years before the massive social security tax increases (beginning in 1983) are receiving a huge return on what they paid in, while those who are paying at today's rates can expect only a paltry return from the current system, IF it can be kept from collapsing.
Those who are against immigration should recognize that a shortage of workers relative to retirees would be devastating to our whole economy, and in particular the health of our retirement systems as long as they are dependent upon current taxpayers to fund today's retirees.
I think that both parties have badly mismanaged social security, but that the Democrats have been particularly bad and demagogic on the issue. Not one person in one hundred really understands how social security works, and Democrats in particular have played upon this ignorance to score political points against anybody who proposes making a necessary change. They have people thinking that the taxes they pay to social security are in a lockbox for them to draw on in the future, while nothing could be further from the truth.
In addition, elderly people vote in large numbers, and I think that many of them are very selfish, caring only that the system doesn't collapse before they die. The elderly are organized, but the average younger taxpayer is not, and most are not focused on the issue. Any proposal to change the current system is threatening to people currently collecting it, in the short run, but the long run demands that something be done. So it is a very difficult issue to solve, but it will have to be dealt with.
We did that kind of reform in Sweden, and it was really hard. I believe Sweden and the UK are the only countries in Europe to have pension systems which will survive the baby boom generation retiring. The rest are in for a lot of trouble (like they didn't have that already, hehehehe...)
